Depending on your age, you may remember a time when your home was not equipped with LED lights, an air conditioning unit, a microwave oven, or even a television set! Now, for most of us, we can’t seem to live without these things. They have become part of the electrified fabric of our daily lives – not to mention cell phones and computers in our increasingly wired world.
Electric vehicles are racing down a similar development path. They reached 5% of new U.S car sales in the second quarter of 2021, and approached 7% in the first half of this year. On an annualized basis, Americans bought more than a million EVs for the first time in the third quarter of this year. Hybrid sales are also up. Combined, these two classes of cars accounted for 16% of total light-duty vehicle sales in the first half of 2023. That’s about three times what those sales were just five years ago.
These production figures also suggest that EVs have crossed a critical production threshold. This typically happens when a new product attains a 5% or greater share of a target market. Back in the 1970s, it took two decades before the now-ubiquitous microwave oven reached 10% of American households, for example. Then production tripled in just a few short years, with household ownership soaring from 25% in 1986 to 90% by 1997. Electric vehicles appear to be following a similar rapid development path.
Whereas it took a decade to sell the first million fully electric vehicles in the U.S., it took only two years to reach the second million in sales, and just over a year to reach the third. The U.S. is now on track for its fourth million in EV sales in the first half of 2024, as more popular brands place electrified versions on the market.
Behold the S-Curve
While electric vehicles may still look like a “shiny new object” to drivers who’ve grown accustomed to shifting gears and stepping on the gas, EV sales are actually following a well-known development path known as the “S-curve.” During the early-adopter phase, which typically lasts a decade or more, sales may crawl at a snail’s pace. But once they cross 5%, sales, market penetration suddenly takes off.
Meanwhile, sales of incumbent technology begin to decline. As for the internal combustion engine, its vehicle sales peaked back in 2017. Since then, net growth in new car sales has been drawn entirely from the burgeoning EV market. According to BloombergNEF, 19 countries had reached this critical 5% sales threshold as of a year ago (including the United States in Q4 2021). Now, five more countries have joined this 5% Club — Canada, Australia, Spain, Thailand and Hungary — in a global cohort that also includes China and most of Western Europe.
The trajectory laid out by some early adopting countries shows that EVs can surge from 5% to 25% of new car sales in just four years. Seven countries – all in Northern Europe – now have an EV market share greater than 25%; their median sales jumped 55% in the first half of 2023, compared to year-earlier figures. Following this same rate of growth, 25% of new U.S. car sales could be fully electric by 2026.
As with any new technology, however, those getting to the top of the S-curve see growth rates plateau as market saturation occurs. For example, Norway, the world’s leading EV pioneer that first achieved 5% EV sales back in 2013, has seen its EV penetration peak out at 80% of new car sales in 2020.
EV Adoption Is About to Hit Overdrive
With the U.S. reaching 5% EV sales only in the last two years, it is a relative newcomer to this exclusive club. Other big auto-producing countries got there years sooner, including China (Q4 2018), the United Kingdom (Q2 2020) and Germany (Q3 2020).
The U.S. auto market poses a particular set of challenges, however. For starters, Americans spend more time in their cars than in any other market, and drive longer distances than most, exacerbating “range anxiety” due to a shortage of long-range batteries and public EV charging infrastructure.
In addition, pickup trucks and SUVs that dominate the U.S. market have been slow to electrify because of their large battery requirements. Even now, 42% growth in U.S. EV sales over the last 12 months, while impressive, hasn’t kept pace with most other members of the 5% Club.
Nevertheless, the legacy Big 3 Detroit automakers are now electrifying some of their most iconic pickup truck brands, including the Ford Explorer and F-150, Chevy Blazer and Silverado, Jeep Wrangler and Ram 1500, among many others. Meanwhile, Tesla, the world’s largest EV maker, is about to launch its Cybertruck pickup, after years of anticipation. Dozens of other EV models, including SUVs and passenger sedans, are slated for introduction in the U.S. market over the next five years.
The U.S. government is also paving an electrified path forward. The Biden administration is calling for EVs and hybrids to make up half of new vehicle sales by 2030. Backing this goal are the 2021 Bipartisan Infrastructure Law and 2022 Inflation Reduction Act that are directing hundreds of billions in public and private funding into renewable energy generation, EV charging networks, battery production and battery-recycling plants.
The IRA law also establishes a $7,500 tax credit for new EV sales and a $4,000 tax credit for used EV sales for qualified vehicles and buyers.
Automakers also have a tipping point when EV sales become self-reinforcing. Based on Europe’s recent experience, EV production triples within two years of reaching 10% of a country’s total auto sales.
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If you have an electric vehicle or are planning to get one soon, a Solaflect Tracker can charge your EV at less than a $1 per gallon equivalent. This solar-powered fuel is far cleaner and cheaper than power you buy from the grid. Now, our new SolaflectEV Solar Charger extends this home EV charging capability to workplace parking lots, where EV drivers have a clean-energy solution for daily commuting needs and beyond.
Solaflect Energy is your home energy management and clean commuting partner. We offer sun-tracking solar arrays for home use and affordable off-grid Solar EV Chargers for commuters and workplace use. Check out our SolaflectEV website for more information, or email us or call (802) 649-3700. Working together, we can make a difference in the global fight on climate change – and reduce the cost of energy right in our communities.